Debenhams plots early flotation

DEBENHAMS, taken off the stock market after a lengthy £1.7bn takeover battle at the end of 2003, is seeking the advice of bankers on refloating the business.

It is understood that several banks have been lined up to meet the department store group in the next few weeks to discuss how it could return to public ownership so soon after going private. These are likely to include JP Morgan, CSFB, Morgan Stanley, Merrill Lynch and Citigroup.

Convincing big shareholders to support a listing could prove difficult, given such a short absence from the quoted markets, according to banking sources.

Investors may be further angered because the availability of cheap debt and the rising stock market have brought good returns for private equity backer Baroness Retail.

However, analysts said that the management team, led by chairman John Lovering and chief executive Rob Templeman, would be able to highlight the strong performance of the group since it was taken private.

In the latest trading update at the end of January, sales in the 13 weeks to November 17 climbed 6%. Cash flow from operations before tax rose more than three times to £97.6m while turnover increased eight per cent to £519m.

This comes at a time of general gloom on the High Street. Figures out this week from the British Retail Consortium will show that shops have continued to struggle since Christmas and many clothing chains are seeing flat, even negative, sales.

Meanwhile, property group British Land last month bought 23 Debenhams stores in a £495m sale and leaseback. This will enable Templeman to fulfil his ambition of expanding the store portfolio from 107 to about 200.

Debenhams did not deny flotation plans, but said: 'We talk to bankers all the time.'